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ST. PAUL SURPLUS LINES INS. CO. v. 1401 DIXON'S

April 9, 1984

ST. PAUL SURPLUS LINES INSURANCE COMPANY
v.
1401 DIXON'S, INC., et al.



The opinion of the court was delivered by: GILES

 GILES, J.

 St. Paul Surplus Lines Insurance Company, ("St. Paul"), seeks a declaratory judgment to the effect that it need not defend or indemnify its insured, 1401 Dixon's, Inc., ("Dixon's"), in a personal injury action pending in state court. St. Paul asserts that exclusions in the policy of insurance, particularly an assault and battery exclusion, relieve it of its duty to defend. In opposition, Dixon's and Arlene Dean Baylock ("Baylock") contend that the exclusions are neither factually applicable nor legally effective. Before the court is St. Paul's motion for summary judgment. For the reasons which follow, the motion shall be granted.

 I. BACKGROUND

 Dixon's, doing business as 1401 Dixon's Lounge, is a tavern located in Sharon Hill, Pennsylvania. In early 1980, the co-owner of Dixon's, Mrs. Thelma Mundy, purchased a general liability insurance policy for the bar from St. Paul. The transaction was effectuated through Mrs. Mundy's broker, George Whitehair, an individual with whom she had dealt for many years. The policy covered property damage, fire loss, and injury to third persons. It contained two important exclusions, one for assault and battery and one for liquor liability. The assault and battery exclusion provided:

 
It is agreed that the insurance does not apply to bodily injury or property damage arising out of assault and battery or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of the insured, his employees, patrons or any other person.

 The liquor liability exclusion denied coverage for bodily injury or property damage arising out of the sale of alcohol to minors or intoxicated individuals, or the violation of any alcohol related statutes, ordinances and regulations. The policy was renewed in early 1981, to run from February, 1981 until February, 1982.

 On December 5, 1981, Gaylord Dean, son of defendant Arlene Dean Baylock, was violently struck by unknown assailants in the parking lot of Dixon's Lounge. The blow allegedly resulted in severe injuries, causing Dean to lapse into a coma and eventually die. Baylock instituted suit against Dixon's and its owners in the Court of Common Pleas, Delaware County. In January of 1983, St. Paul was notified of Baylock's claim against Dixon's. St. Paul filed this declaratory judgment action pursuant to 28 U.S.C. § 2201 (1976).

 Although St. Paul's motion for summary judgment presents many issues, only two need be addressed. Dixon's argues that there is a question of fact whether Dean's injuries actually arose out of an assault and battery within the meaning of the above quoted exclusion. In addition, both defendants contend that Dixon's co-owner, Mrs. Mundy, was not made aware of and did not understand the exclusion, thus rendering it ineffective under the rule announced in Hionis v. Northern Mutual Insurance Co., 230 Pa. Super. 511, 517, 327 A.2d 363, 365 (1974). *fn1"

 II. DISCUSSION

 A. Applicability of the Exclusion

 St. Paul must defend its insured in the underlying state court action if the claim "potentially may become one which is within the scope of the policy. . . ." Casper v. American Guarantee and Liability Ins. Co., 408 Pa. 426, 428, 184 A.2d 247, 248 (1962). See also Cadwallader v. New Amsterdam Cas. Co., 396 Pa. 582, 589, 152 A.2d 484, 488 (1959). In determining the nature of the claim asserted, a court must look to the allegations in the complaint against the insured. Wilson v. Maryland Cas. Co., 377 Pa. 588, 594, 105 A.2d 304, 307 (1954). The court in Wilson explained:

 
the rule everywhere is that the obligation of a casualty insurance company to defend an action brought against the insured is to be determined solely by the allegations of the complaint in the action, and that the company is not required to defend if it would not be bound to indemnify the insured even though the claim against him should prevail in that action. . . .

 Id. (citations omitted). Therefore, in analyzing St. Paul's potential liability, the appropriate starting point is the ...


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